Wealthy benefit the most from top tax breaks, government study shows

http://www.nbcnews.com/business/wealthy-benefit-most-top-tax-breaks-government-study-shows-6C10128163

May 30, 2013

The top ten tax deductions, credits and exclusions will keep $12 trillion out of federal government coffers over the next decade, and several of them mainly benefit the wealthiest Americans, a new study from the Congressional Budget Office shows.

The top 20 percent of income earners will reap more than half of the $900 billion in benefits from these tax breaks that will accrue in 2013, the non-partisan CBO said on Wednesday.

Further, 17 percent of the total benefits would go to the top 1 percent of income earners -- families earning roughly $450,000 or more. The same group that was hit with a tax rate hike in January.

The benefits of preferential tax rates on capital gains and dividends, a break worth $161 billion this year, go almost entirely to the wealthy, including 68 percent to the top one percent of earners.

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But the study also showed that benefits for the largest of the tax preferences, the exclusion for employer-paid health benefits, worth $3.4 trillion over 10 years, are more evenly distributed, with well over half of the benefits going to the middle 60 percent of earners.

The middle 20 percent of earners also got the biggest benefit from excluding a portion of Social Security and Railroad Retirement benefits, a perk worth $414 billion over 10 years.

Three other big tax breaks, the $2 trillion exclusion of net pension contributions and earnings over 10 years, the $1 trillion deduction for mortgage interest and the $1.1 trillion deduction for state and local taxes, also benefited the top 20 percent disproportionately.

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